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The decline in US stocks deepened while the dollar strengthened, as geopolitical fears and a looming interest-rate rise by the Federal Reserve curbed investors’ risk appetite.

The S&P 500 was down as much 0.6 per cent to 2,368.48 before trimming its losses to trade 0.4 per cent lower. Meanwhile, the Dow Jones Industrial Average fell 0.3 per cent to 20,947.67, while the Nasdaq Composite slid 0.5 per cent to 5,840.00.

The sell-off in US stocks was led by a 1 per cent drop in financials, which rallied hard last week as expectations for a rate rise increased. Indeed, federal fund futures currently point to a 98 per cent chance of a rate rise this month. Higher rates are a positive for banks’ net interest margins — the difference in the rates they charge on loans and their own funding costs.

That also curbed demand for safe-haven assets like government bonds. Yields on the US 10-year Treasury note, which moves inversely to price, were up 2.4 basis points to 2.502 per cent. Meanwhile, spot gold prices slid 0.4 per cent to $1,228.63 a troy ounce.

The prospect of higher rates also helped lift the US dollar, with the dollar index — a gauge of the greenback against a basket of peers — rising 0.2 per cent.

For now, investors await the US jobs report due Friday, when strong jobs growth and, more notably, a possible uptick in wages could cement the odds for a Fed move this month.